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EXHIBIT 10.6
CORAL SYSTEMS, INC.
[PIONEER BANK OF LONGMONT LOGO] COMMERCIAL/
1610 Hover Street AGRICULTURAL
Longmont, Colorado 80501 ---------------------------------- REVOLVING OR DRAW
(303) 651-7777 ADDRESS NOTE-VARIABLE RATE
"LENDER" ----------------------------------
1500 KANSAS AVE, SUITE 2E
LONGMONT, CO 80501
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TELEPHONE NO. IDENTIFICATION NO.
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OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
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DLA VARIABLE $750,000.00 04/26/96 04/26/97 3528103
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PROMISE TO PAY
For value received, Borrower promises to pay to the order of Lender indicated
above the principal amount of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 Dollars
($750,000.00) or, if less, the aggregate unpaid principal amount of all loans
or advances made by the Lender to the Borrower, plus interest on the unpaid
principal balance at the rate and in the manner described below. All amounts
received by Lender shall be applied first to late payment charges and expenses,
then to accrued interest, and then to principal.
INTEREST RATE: This Note has a variable rate feature. Interest on the Note may
change from time to time if the Index Rate identified below changes. Interest
shall be computed on the basis of 360 days per year. Interest on this Note
shall be calculated at a variable rate equal to ONE AND 250/1000 percent
(1.250%) per annum over the Index Rate. The initial Index Rate is currently
EIGHT AND 250/1000 percent (8.250%) per annum. Therefore, the initial interest
rate on this Note shall be NINE AND 500/1000 percent (9.500%) per annum. Any
change in the interest rate resulting from a change in the Index Rate will be
effective on: A DAILY BASIS DETERMINED AND ANNOUNCED BY THE BANK. AT ITS SOLE
DISCRETION THE BANK RESERVES THE RIGHT TO MAKE LOANS AT, ABOVE, OR BELOW THE
BASE RATE INDEX RATE: The Index Rate for this Note shall be: NEW YORK PRIME
MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be n/a
percent (na%) per annum. The maximum interest rate on this Note shall not
exceed n/a percent (n/a%) per annum or the maximum interest rate Lender is
permitted to charge by law, whichever is less.
DEFAULT RATE: In the event of any default under this Note, the Lender may in its
discretion, determine that all amounts owed to Lender shall bear interest at the
lesser of: 8.0 or the maximum interest rate Lender is permitted to charge by
law.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to
the following schedule:
INTEREST DUE AND PAYABLE ON A MONTHLY BASIS COMMENCING 5-26-96 WITH ALL UNPAID
PRINCIPAL AND ACCRUED INTEREST DUE AT OR BEFORE MATURITY ON 04-26-97
All payments will be made to Lender at its address described above and in
lawful currency of the United States of America.
RENEWAL: If checked, [ ] this Note is a renewal of loan number _______________ .
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in, and pledges and
assigns to Lender all of Borrower's rights, title, and interest, in all monies,
instruments, savings, checking and other deposit accounts of Borrower's,
(excluding IRA, Keogh and trust accounts and deposits subject to tax penalties
if so assigned) that are now or in the future in Lender's custody or control.
Upon default, and to the extent permitted by applicable law, Lender may
exercise its security interest in all such property which shall be in addition
to Lender's common law right of setoff. [X] If checked, the obligations under
this Note are also secured by a lien and/or security interest in the property
described in the documents executed in connection with this Note as well as any
other property designated as security now or in the future.
PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all prepayments
will be credited as determined by Lender and as permitted by law. If this Note
is prepaid in full, there will be: [ ] No minimum finance charge or prepayment
penalty. [X] A minimum finance charge of $25.00. [ ] A prepayment penalty of
_____% of the principal prepaid.
LATE PAYMENT CHARGE: If a payment is received more than 10 days late, Borrower
will be charged a late payment charge of $10.00 or 5.000% of the payment amount,
whichever is [ ] greater [X] less, as permitted by law.
REVOLVING OR DRAW FEATURE: [X] This Note possesses a revolving feature. Upon
satisfaction of the conditions set forth in this Note, Borrower shall be
entitled to borrow up to the full principal amount of the Note and to repay and
reborrow from time to time during the term of this Note. [ ] This Note
possesses a draw feature. Upon satisfaction of the conditions set forth in this
Note, Borrower shall be entitled to make one or more draws under this Note. The
aggregate amount of such draws shall not exceed the full principal amount of
this Note.
Lender shall maintain a written ledger of the amounts loaned to and repaid by
Borrower under this Note. The aggregate unpaid principal amount shown on such
ledger shall be rebuttable presumptive evidence of the principal amount owing
and unpaid on this Note. The Lender's failure to record the date and amount of
any loan or advance on such ledger shall not limit or otherwise affect the
obligations of the Borrower under this Note to repay the principal amount of
the loans or advances together with all interest accruing thereon. Lender shall
not be obligated to provide Borrower with a copy of the ledger on a periodic
basis, however, Borrower shall be entitled to inspect or obtain a copy of the
ledger during Lender's business hours.
CONDITIONS FOR ADVANCES: If there is no default under this Note, Borrower shall
be entitled to borrow monies under this Note (subject to the limitations
described above) under the following conditions:
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BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.
NOTE DATE: APRIL 26, 1996
BORROWER: CORAL SYSTEMS, INC. BORROWER: CORAL SYSTEMS, INC.
/s/ ERIC JOHNSON /s/ HOWARD KAUSHANSKY
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ERIC JOHNSON HOWARD KAUSHANSKY
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TERMS AND CONDITIONS
1. DEFAULT: Borrower will be in default under this Note in the event that
Borrower or any guarantor:
(a) fails to make any payment on this Note or any other indebtedness to
Lender when due;
(b) fails to perform any obligation or breaches any warranty or covenant
to Lender contained in this Note or any other present or future
written agreement regarding this or any indebtedness of Borrower to
Lender;
(c) provides or causes any false or misleading signature or representation
to be provided to Lender;
(d) allows the collateral securing this Note (lf any) to be lost, stolen,
destroyed, damaged in any material respect, or subjected to seizure or
confiscation;
(e) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Borrower, any guarantor, or any of their
property;
(f) dies, becomes legally incompetent, is dissolved or terminated, ceases
to operate its business, becomes insolvent, makes an assignment for
the benefit of creditors, or becomes the subject of any bankruptcy,
insolvency or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure for any reason, or Lender, for
any reason, in good faith deems itself insecure.
2. RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note, Lender
will be entitled to exercise one or more of the following remedies without
notice or demand (except as required by law):
(a) to declare the principal amount plus accrued interest under this Note
and all other present and future obligations of Borrower immediately
due and payable in full;
(b) to collect the outstanding obligations of Borrower with or without
resorting to judicial process;
(c) to take possession of any collateral in any manner permitted by law;
(d) to require Borrower to deliver and make available to Lender any
collateral at a place reasonably convenient to Borrower and Lender;
(e) to sell, lease or otherwise dispose of any collateral and collect any
deficiency balance with or without resorting to legal process;
(f) to set-off Borrower's obligations against any amounts due to Borrower
including, but not limited to monies, instruments, and deposit
accounts maintained with Lender; and
(g) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and
in any order. Lender's remedies under this paragraph are in addition to those
available at common law, such as the right of set-off.
3. DEMAND FEATURE: If this Note contains a demand feature, then notwithstanding
anything to the contrary contained in this Note, Lender's rights with respect
to the events of default identified above shall not be limited, restricted,
impaired or otherwise adversely affected by the demand feature of this Note.
Lender's right to demand payment, at any time, and from time to time, shall
be in Lender's sole and absolute discretion, whether or not any default has
occurred.
4. FINANCIAL INFORMATION: Borrower will provide Lender with current financial
statements and other financial information (including, but not limited to,
balance sheets and profit and loss statements) upon request.
5. MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Lender's rights under this Note must be contained in a writing
signed by Lender. Lender may perform any of Borrower's obligations or delay or
fail to exercise any of its rights without causing a waiver of those
obligations or rights. A waiver on one occasion will not constitute a waiver on
any other occasion. Borrower's obligations under this Note shall not be
affected if Lender amends, compromises, exchanges, fails to exercise, impairs
or releases any of the obligations belonging to any co-borrower or guarantor or
any of its rights against any co-borrower, guarantor or collateral.
6. SEVERABILITY AND INTEREST LIMITATION: If any provision of this Note violates
the law or is unenforceable, the rest of the Note will remain valid.
Notwithstanding anything contained in this Note to the contrary, in no event
shall interest accrue under this Note, before or after maturity, at a rate in
excess of the highest rate permitted by applicable law, and if interest
(including any charge or fee held to be interest by a court of competent
jurisdiction) in excess thereof be paid, any excess shall constitute a payment
of, and be applied to, the principal balance hereof, and if the principal
balance has been fully paid, then such interest shall be repaid to the
Borrower.
7. ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies or obligations described in this Note without the prior written
consent of Lender which may be withheld by Lender in its sole discretion.
Lender will be entitled to assign some or all of its rights and remedies
described in this Note without notice to or the prior consent of Borrower in
any manner.
8. NOTICE: Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.
9. APPLICABLE LAW: This Note shall be governed by the laws of the state
indicated in Lender's address. Borrower consents to the jurisdiction and venue
of any court located in the state indicated in Lender's address in the event of
any legal proceeding pertaining to the negotiaton, execution, performance or
enforcement of any term or condition contained in this Note or any related loan
document and agrees not to commence or seek to remove such legal proceeding in
or to a different court.
10. COLLECTION COSTS: If Lender hires an attorney to assist in collecting any
amount due or enforcing any right or remedy under this Note, Borrower agrees to
pay Lender's attorney's fees, to the extent permitted by applicable law, and
collection costs.
11. MISCELLANEOUS: This Note is being executed for commercial/agricultural
purposes. Borrower and Lender agree that time is of the essence. Borrower
waives presentment, demand for payment, notice of dishonor and protest.
Borrower hereby waives any right to trial by jurv in any civil action arising
out of, or based upon, this Note or the collateral securing this Note. If
Lender obtains a Judgment for any amount due under this Note interest will
accrue on the judgment at the Default Rate described in this Note. All
references to Borrower in this Note shall include all of the parties signing
this Note. If there is more than one Borrower, their obligations will be joint
and several. This Note and any related documents represents the complete and
integrated understanding between Borrower and Lender pertaining to the terms
and conditions of those documents.
12. ADDITIONAL TERMS: Borrower agrees to provide yearly financial statements and
income tax returns, both business and personal (where applicable).
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CORAL SYSTEMS, INC
[PIONEER BANK OF LONGMONT LOGO] DISBURSEMENT
1610 Hover Street INSTRUCTIONS
Longmont, Colorado 80501 ------------------------------------
(303) 651-7777 ADDRESS
"LENDER" ------------------------------------
1500 KANSAS AVE, SUITE 2E
LONGMONT, CO 80501
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TELEPHONE NO. IDENTIFICATION NO.
- -------------------------------------------------------------------------------------------------------------------------
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
- -------------------------------------------------------------------------------------------------------------------------
DLA VARIABLE $750,000.00 04/26/96 04/26/97 3528103
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Dated: APRIL 26, 1996
Borrower has borrowed money from Lender indicated above pursuant to a
PROMISSORY NOTE dated APRIL 26, 1996
Borrower hereby instructs Lender to disburse the initial or complete proceeds
from the PROMISSORY NOTE in the following manner:
TITLE EXAMINATION n/a
TITLE INSURANCE COMPANY n/a
APPRAISAL FEE n/a
PAID TO PUBLIC OFFICIALS n/a
ATTORNEY FEES n/a
MORTGAGE REGISTRATION FEE n/a
CREDIT REPORTING FEE n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
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BORROWER: CORAL SYSTEMS, INC. BORROWER: CORAL SYSTEMS, INC.
By: /s/ ERIC JOHNSON By: /s/ HOWARD KAUSHANSKY
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ERIC JOHNSON HOWARD KAUSHANSKY
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[PIONEER BANK OF LONGMONT LOGO] OWNER OF COLLATERAL
1610 Hover Street -------------------------------------------- COMMERCIAL
Longmont, Colorado 80501 Coral Systems, Inc SECURITY
(303) 651-7777 AGREEMENT
"LENDER" --------------------------------------------
ADDRESS
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1500 KANSAS AVE, SUITE 2E
LONGMONT, CO 80501
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TELEPHONE NO. IDENTIFICATION NO.
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BORROWER LOCATION OF COLLATERAL
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CORAL SYSTEMS, INC
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ADDRESS
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1500 KANSAS AVE,, SUITE 2E
LONGMONT, CO 80501
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TELEPHONE NO. IDENTIFICATION NO.
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1. SECURITY INTEREST. Owner of Collateral ("Owner") grants to Lender
identified above a continuing security interest in the Collateral described
below to secure the obligations described in this Agreement.
2. OBLIGATIONS. The Collateral shall secure the payment and performance of
all of Borrower's and Owner's present and future, joint and/or several, direct
and indirect, absolute and contingent, express and implied, indebtedness,
(including costs of collection, legal expenses and attorneys' fees, incurred by
Lender upon the occurrence of a default under this Agreement, in collecting or
enforcing payment of such indebtedness, or preserving, protecting or realizing
on the Collateral herein), liabilities, obligations and covenants (cumulatively
"Obligations") to Lender including (without limitation) those arising under or
pursuant to:
a. this Agreement and the following promissory notes and agreements:
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INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
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VARIABLE $750,000.00 4/26/96 4/26/97 3528103
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b. all other present or future, Obligations of Borrower or Owner to
Lender (WHETHER INCURRED FOR THE SAME OR DIFFERENT PURPOSES THAN THE
FOREGOING);
c. all amendments, modifications, replacements or substitutions to any of
the foregoing; and
d. applicable law.
3. COLLATERAL. The Collateral shall consist of all of the
following-described property and Owner's rights, title and interest in such
property whether now owned or hereafter acquired by Owner and wheresoever
located:
[X] All accounts and contract rights including, but not limited to, the
accounts and contract rights described on Schedule A attached hereto and
incorporated herein by this reference;
[ ] All chattel paper including, but not limited to, the chattel paper
described on Schedule A attached hereto and incorporated herein by this
reference;
[ ] All documents including, but not limited to, the documents described on
Schedule A attached hereto and incorporated herein by this reference;
[X] All equipment, including, but not limited to, the equipment described on
Schedule A attached hereto and incorporated herein by this reference;
[ ] All fixtures, including, but not limited to, the fixtures located or to
be located on the real property described on Schedule B attached hereto
and incorporated herein by this reference;
[ ] All general intangibles including, but not limited to, the general
intangibles described on Schedule A attached hereto and incorporated
herein by this reference;
[ ] All instruments including, but not limited to, the instruments
described on Schedule A attached hereto and incorporated herein by this
reference;
[X] All inventory including, but not limited to, the inventory described on
Schedule A attached hereto and incorporated herein by this reference;
[ ] All minerals or the like located on or related to the real property
described on Schedule B attached hereto and incorporated herein by this
reference;
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6. REPRESENTATIONS, WARRANTIES, AND COVENANTS. Owner represents, warrants
and covenants to Lender that:
(a) Owner is and shall remain the sole owner of the Collateral;
(b) Neither Owner nor, to the best of Owner's knowledge, any other party
has used, generated, released, discharged, stored, or disposed of any
hazardous waste, toxic substance, or related material (cumulatively
"Hazardous Materials") or transported any Hazardous Materials across
the property. Owner shall not commit or permit such actions to be
taken in the future. The term "Hazardous Materials" shall mean any
substance, material, or waste which is or becomes regulated by any
governmental authority including, but not limited to, (i) petroleum;
(ii) asbestos; (iii) polychlorinated biphenyls; (iv) those substances,
materials or wastes designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act or listed pursuant to Section 307
of the Clean Water Act or any amendments or replacements to these
statutes; (v) those substances, materials or wastes defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation
and Recovery Act or any amendments or replacements to that statute; or
(vi) those substances, materials or wastes defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, or any amendments or
replacements to that statute;
(c) Owner's chief executive office, chief place of business, office where
its business records are located, or residence is the address
identified above. Owner's other executive offices, places of business,
locations of its business records, or domiciles are described on
Schedule C attached hereto and incorporated herein by this reference.
Owner shall immediately advise Lender in writing of any change in or
addition to the foregoing addresses;
(d) Owner shall not become a party to any restructuring of its form of
business or participate in any consolidation, merger, liquidation or
dissolution without providing Lender with thirty (30) or more days'
prior written notice of such change;
(e) Owner shall notify Lender of the nature of any intended change of
Owner's name, or the use of any trade name, and the effective date of
such change;
(f) The Collateral is and shall at all times remain free of all tax and
other liens, security interests, encumbrances and claims of any kind
except for those belonging to Lender and those described on Schedule D
attached hereto and incorporated herein by this reference. Without
waiving the event of default as a result thereof, Owner shall take any
action and execute any document needed to discharge the foregoing
liens, security interests, encumbrances and claims;
(g) Owner shall defend the Collateral against all claims and demands of
all persons at any time claiming any interest therein;
(h) All of the goods, fixtures, minerals or the like, and standing timber
constituting the Collateral is and shall be located at Owner's
executive offices, places of business, residence and domiciles
specifically described in this Agreement. Owner shall not change the
location of any Collateral without the prior written consent of
Lender;
(i) Owner shall provide Lender with possession of all chattel paper and
instruments constituting the Collateral, and Owner shall promptly mark
all chattel paper, instruments, and documents constituting the
Collateral to show that the same are subject to Lender's security
interest;
(j) All of Owner's accounts or contract rights; chattel paper; documents;
general intangibles; instruments; and federal, state, county, and
municipal government and other permits and licenses; trusts, liens,
contracts, leases, and agreements constituting the Collateral are and
shall be valid, genuine and legally enforceable obligations and rights
belonging to Owner against one or more third parties and not subject
to any claim, defense, set-off or counterclaim of any kind;
(k) Owner shall not amend, modify, replace, or substitute any account or
contract right; chattel paper; document; general intangible; or
instrument constituting the Collateral without the prior written
consent of Lender;
(l) Owner has the right and is duly authorized to enter into and perform
its obligations under this Agreement. Owner's execution and
performance of these obligations do not and shall not conflict with
the provisions of any statute, regulation, ordinance, rule of law,
contract or other agreement which may now or hereafter be binding on
Owner;
(m) No action or proceeding is pending against Owner which might result in
any material or adverse change in its business operations or financial
condition or materially affect the Collateral;
(n) Owner has not violated and shall not violate any applicable federal,
state, county or municipal statute, regulation or ordinance (including
but not limited to those governing Hazardous Materials) which may
materially and adversely affect its business operations or financial
condition or the Collateral;
(o) Owner shall, upon Lender's request, deposit all proceeds of the
Collateral into an account or accounts maintained by Owner or Lender
at Lender's institution; and
(p) This Agreement and the obligations described in this Agreement are
executed and incurred for business and not consumer purposes.
7. SALE OF COLLATERAL. Owner shall not assign, convey, lease, sell or
transfer any of the Collateral to any third party without the prior written
consent of Lender except for sales of inventory to buyers in the ordinary
course of business.
8. FINANCING STATEMENTS AND OTHER DOCUMENTS. Owner shall take all actions and
execute all documents required by Lender to attach, perfect and maintain
Lender's security interest in the Collateral and establish and maintain Lender's
right to receive the payment of the proceeds of the Collateral including, but
not limited to, executing any financing statements, fixture filings,
continuation statements, notices of security interest and other documents
required by the Uniform Commercial Code and other applicable law. Owner shall
pay the costs of filing such documents in all offices wherever filing or
recording is deemed by Lender to be necessary or desirable. Lender shall be
entitled to perfect its security interest in the Collateral by filing carbon,
photographic or other reproductions of the aforementioned documents with any
authority required by the Uniform Commercial Code or other applicable law.
Lender may execute and file any financing statements, as well as extensions,
renewals and amendments of financing statements in such form as Lender may
require to perfect and maintain perfection of any security interest granted in
this Agreement.
9. INQUIRIES AND NOTIFICATION TO THIRD PARTIES. Owner hereby authorizes
Lender to contact any third party and make any inquiry pertaining to Owner's
financial condition or the Collateral. In addition, Lender is authorized to
provide oral or written notice of its security interest in the Collateral to
any third party.
10. COLLECTION OF INDEBTEDNESS FROM THIRD PARTIES. Lender shall be entitled
to notify, and upon the request of Lender, Owner shall notify any account debtor
or other third party (including, but not limited to, insurance companies) to
pay any indebtedness or obligation owing to Owner and constituting the
Collateral (cumulatively "Indebtedness") to Lender whether or not a default
exists under this Agreement. Owner shall diligently collect the Indebtedness
owing to Owner from its account debtors and other third parties until the
giving of such notification. In the event that Owner possesses or receives
possession of any instruments or other remittances with respect to the
Indebtedness following the giving of such notification or if the instruments or
other remittances constitute the prepayment of any Indebtedness or the payment
of any insurance proceeds, Owner shall hold such instruments and other
remittances in trust for Lender apart from its other property, endorse the
instruments and other remittances to Lender, and immediately provide Lender
with possession of the instruments and other remittances. Lender shall be
entitled, but not required, to collect (by legal proceedings or otherwise),
extend the time for payment, compromise, exchange or release any obligor or
collateral upon, or otherwise settle any of the Indebtedness whether or not an
event of default exists under this Agreement. Lender shall not be liable to
Owner for any action, error, mistake, omission or delay pertaining to the
actions described in this paragraph or any damages resulting therefrom.
11. POWER OF ATTORNEY. Owner hereby appoints Lender as its attorney-in-fact
to endorse Owner's name on all instruments and other remittances payable to
Owner with respect to the Indebtedness or other documents pertaining to
Lender's actions in connection with the Indebtedness. In addition, Lender
shall be entitled, but not required, to perform any action or execute any
document required to be taken or executed by Owner under this Agreement.
Lender's performance of such action or execution of such documents shall not
relieve Owner from any obligation or cure any default under this Agreement. The
powers of attorney described in this paragraph are coupled with an interest and
are irrevocable.
12. USE AND MAINTENANCE OF COLLATERAL. Owner shall use the Collateral solely
in the ordinary course of its business, for the usual purposes intended by the
manufacturer (if applicable), with due care, and in compliance with the laws,
ordinances, regulations, requirements and rules of all federal, state, county
and municipal authorities including environmental laws and regulations and
insurance policies. Owner shall not make any alterations, additions or
improvements to the Collateral without the prior written consent of Lender.
Without limiting the foregoing, all alterations, additions and improvements
made to the Collateral shall be subject to the security interest belonging to
Lender, shall not be removed without the prior written consent of Lender, and
shall be made at Owner's sole expense. Owner shall take all actions and make
any repairs or replacements needed to maintain the Collateral in good condition
and working order.
13. LOSS OR DAMAGE. Owner shall bear the entire risk of any loss, theft,
destruction or damage (cumulatively "Loss or Damage") to all or any part of the
Collateral. In the event of any Loss or Damage, Owner will either restore the
Collateral to its previous condition, replace the Collateral with similar
property acceptable to Lender in its sole discretion, or pay or cause to be paid
to Lender the decrease in the fair market value of the affected Collateral.
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14. INSURANCE. The Collateral will be kept insured for its full value
against all hazards including loss or damage caused by fire, collision, theft or
other casualty. If the Collateral consists of a motor vehicle, Owner will
obtain comprehensive and collision coverage in amounts at least equal to the
actual cash value of the vehicle with deductibles not to exceed $ ___n/a__ .
Insurance coverage obtained by Owner shall be from a licensed insurer subject
to Lender's approval. Owner shall assign to Lender all rights to receive
proceeds of insurance not exceeding the amount owed under the obligations
described above, and direct the insurer to pay all proceeds directly to Lender.
The insurance policies shall require the insurance company to provide Lender
with at least thirty (30) days' written notice before such policies are altered
or cancelled in any manner. The insurance policies shall name Lender as a loss
payee and provide that no act or omission of Owner or any other person shall
affect the right of Lender to be paid the insurance proceeds pertaining to the
loss or damage of the Collateral. In the event Owner fails to acquire or
maintain insurance, Lender (after providing notice as may be required by law)
may in its discretion procure appropriate insurance coverage upon the
Collateral and charge the insurance cost as an advance of principal under the
promissory note. Owner shall furnish Lender with evidence of insurance
indicating the required coverage. Lender may act as attorney-in-fact for Owner
in making and settling claims under insurance policies, cancelling any policy
or endorsing Owners name on any draft or negotiable instrument drawn by any
insurer.
15. INDEMNIFICATION. Lender shall not assume or be responsible for the
performance of any of Owner's obligations with respect to the Collateral under
any circumstances. Owner shall immediately provide Lender with written notice
of and indemnify and hold Lender and its shareholders, directors, officers,
employees and agents harmless from all claims, damages, liabilities (including
attorneys' fees and legal expenses), causes of action, actions, suits and other
legal proceedings (cumulatively "Claims") pertaining to its business operations
or the Collateral including, but not limited to, those arising from Lender's
performance of Owner's obligations with respect to the Collateral. Owner, upon
the request of Lender, shall hire legal counsel to defend Lender from such
Claims, and pay the attorneys' fees, legal expenses and other costs to the
extent permitted by applicable law, incurred in connection therewith. In the
alternative, Lender shall be entitled to employ its own legal counsel to defend
such Claims at Owner's cost.
16. TAXES AND ASSESSMENTS. Owner shall execute and file all tax returns and
pay all taxes, licenses, fees and assessments relating to its business
operations and the Collateral (including, but not limited to, income taxes,
personal property taxes, withholding taxes, sales taxes, use taxes, excise
taxes and workers' compensation premiums) in a timely manner.
17. INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner shall allow
Lender or its agents to examine, inspect and make abstracts and copies of the
Collateral and Owner's books and records pertaining to Owner's business
operations and financial condition or the Collateral during normal business
hours. Owner shall provide any assistance required by Lender for these
purposes. All of the signatures and information pertaining to the Collateral or
contained in the books and records shall be genuine, true, accurate and
complete in all respects. Owner shall note the existence of Lender's security
interest in its books and records pertaining to the Collateral.
18. DEFAULT. Owner shall be in default under this Agreement in the event
that Owner, Borrower or any guarantor:
(a) fails to make any payment under this Agreement or any other
indebtedness to Lender when due;
(b) fails to perform any obligation or breaches any warranty or
covenant to Lender contained in this Agreement or any other present
or future written agreement regarding this or any other
indebtedness to Lender;
(c) provides or causes any false or misleading signature or
representation to be provided to Lender;
(d) allows the Collateral to be destroyed, lost or stolen, damaged in any
material respect, or subjected to seizure or confiscation;
(e) seeks to revoke, terminate or otherwise limit its liability under
any continuing guaranty;
(f) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Owner, any guarantor, or any of their
property;
(g) dies, becomes legally incompetent, is dissolved or terminated,
ceases to operate its business, becomes insolvent, makes an
assignment for the benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor rehabilitation proceeding;
(h) allows the Collateral to be used by anyone to transport or store
goods, the possession, transportation, or use of which, is illegal;
or;
(i) causes Lender in good faith to deem itself insecure for any reason.
19. RIGHTS OF LENDER ON DEFAULT. If there is a default under this Agreement,
Lender shall be entitled to exercise one or more of the following remedies
without notice or demand (except as required by law):
(a) to declare the Obligations immediately due and payable in full;
(b) to collect the outstanding Obligations with or without resorting to
judicial process;
(c) to change Owner's mailing address, open Owner's mail, and retain
any instruments or other remittances constituting the Collateral
contained therein;
(d) to take possession of any Collateral in any manner permitted by law;
(e) to apply for and obtain, without notice and upon ex parte
application, the appointment of a receiver for the Collateral
without regard to Owner's financial condition or solvency, the
adequacy of the Collateral to secure the payment or performance of
the obligations, or the existence of any waste to the Collateral;
(f) to require Owner to deliver and make available to Lender any
Collateral at a place reasonably convenient to Owner and Lender;
(g) to sell, lease or otherwise dispose of any Collateral and collect
any deficiency balance with or without resorting to legal process;
(h) to set-off Owner's obligations against any amounts due to Owner
including, but not limited to, monies, instruments, and deposit
accounts maintained with Lender; and
(i) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order. If notice to Owner of intended disposition of Collateral is required
by law, Lender will provide reasonable notification of the time and place of any
sale or intended disposition as required under the Uniform Commercial Code. In
the event that Lender institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of a prejudgment remedy in an action against
Owner, Owner waives the posting of any bond which might otherwise be required.
Lender's remedies under this paragraph are in addition to those available at
common law, such as setoff.
20. WAIVER OF JURY TRIAL. LENDER AND OWNER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THE
PROMISSORY NOTE, THIS AGREEMENT AND ANY OTHER AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY
THE PROMISSORY NOTE.
21. APPLICATION OF PAYMENTS. Whether or not a default has occurred under
this Agreement, all payments made by or on behalf of Owner and all credits due
to Owner from the disposition of the Collateral or otherwise may be applied
against the amounts paid by Lender (including attorneys' fees and legal
expenses) in connection with the exercise of its rights or remedies described in
this Agreement and any interest thereon and then to the payment of the
remaining Obligations in whatever order Lender chooses.
22. REIMBURSEMENT OF AMOUNTS EXPENDED BY LENDER. Owner shall reimburse
Lender for all amounts (including attorneys' fees and legal expenses) expended
by Lender in the performance of any action required to be taken by Owner or the
exercise of any right or remedy belonging to Lender under this Agreement,
together with interest thereon at the lower of the highest rate described in
any promissory note or credit agreement executed by Borrower or Owner at the
highest rate allowed by law from the date of payment until the date of
reimbursement. These sums shall be included in the determination of
Obligations, shall be secured by the Collateral identified in this Agreement
and shall be payable upon demand.
23. ASSIGNMENT. Owner shall not be entitled to assign any of its rights,
remedies or obligations described in this Agreement without the prior written
consent of Lender. Consent may be withheld by Lender in its sole discretion.
Lender shall be entitled to assign some or all of its rights and remedies
described in this Agreement without notice to or the prior consent of Owner in
any manner.
24. MODIFICATION AND WAIVER. The modification or waiver of any of Owner's
Obligations or Lender's rights under this Agreement must be contained in a
writing signed by Lender. Lender may perform any of Owner's Obligations or
delay or fail to exercise any of its rights without causing a waiver of those
Obligations or rights. A waiver on one occasion shall not constitute a waiver
on any other occasion. Owner's Obligations under this Agreement shall not be
affected if Lender amends, compromises, exchanges, fails to exercise, impairs
or releases any of the obligations belonging to any Owner or third party or any
of its rights against any Owner, third party or collateral.
7
25. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of Owner and Lender and their respective successors, assigns,
trustees, receivers, administrators, personal representatives, legatees, and
devisees.
26. NOTICES. Any notice or other communication to be provided under this
Agreement shall be in writing and sent to the parties at the addresses
described in this Agreement or such other address as the parties may designate
in writing from time to time.
27. SEVERABILITY. If any provision of this Agreement violates the law or is
unenforceable, the rest of the Agreement shall remain valid.
28. APPLICABLE LAW. This Agreement shall be governed by the laws of the
state identified in Lender's address. Owner consents to the jurisdiction and
venue of any court located in the state indicated in Lender's address in the
event of any legal proceeding pertaining to the negotiation, execution,
performance or enforcement of any term or condition contained in this Agreement
or any related document and agrees not to commence or seek to remove such legal
proceeding in or to a different court.
29. COLLECTION COSTS. If Lender hires an attorney to assist in collecting
any amount due or enforcing any right or remedy under this Agreement, Owner
agrees to pay Lender's attorneys' fees and collection costs.
30. MISCELLANEOUS. This Agreement is executed for commercial purposes. Owner
shall supply information regarding Owner's business operations and financial
condition or the Collateral in the form and manner as requested by Lender from
time to time. All information furnished by Owner to Lender shall be true,
accurate and complete in all respects. Owner and Lender agree that time is of
the essence. Owner waives presentment, demand for payment, notice of dishonor
and protest except as required by law. All references to Owner in this
Agreement shall include all parties signing below except Lender. If there is
more than one Owner, their obligations shall be joint and several. This
Agreement shall remain in full force and effect until Lender provides Owner
with written notice of termination. This Agreement and any related documents
represent the complete and integrated understanding between Owner and Lender
pertaining to the terms and conditions of those documents.
31. ADDITIONAL TERMS:
Owner acknowledges that Owner has read, understands, and agrees to the terms
and conditions of this Agreement.
Dated: APRIL 26, 1996
LENDER: PIONEER BANK OF LONGMONT
/s/ DANIEL L. ALLEN
----------------------------------------
DANIEL L ALLEN
PRESIDENT AND CEO
OWNER: CORAL SYSTEMS, INC. OWNER: CORAL SYSTEMS, INC.
/s/ ERIC JOHNSON /s/ HOWARD KAUSHANSKY
- ------------------------------------- ----------------------------------------
ERIC JOHNSON HOWARD KAUSHANSKY
8
SCHEDULE A
ALL ACCOUNTS, ACCOUNTS RECEIVABLE, CASH, EQUIPMENT, TRANSFERABLE THIRD PARTY
SOFTWARE RIGHTS, HARDWARE, FURNITURE, AND INVENTORY NOW OWNED OR HEREAFTER
ACQUIRED WHEREVER LOCATED, EXCEPTING PURCHASE MONEY SECURITY INTERESTS WHERE
APPLICABLE.
SCHEDULE B
SCHEDULE C
9
--------------------------------------------
[PIONEER BANK OF LONGMONT LOGO] OWNER OF COLLATERAL
1610 Hover Street -------------------------------------------- AGREEMENT
Longmont, Colorado 80501 CORAL SYSTEMS, INC TO FURNISH
(303) 651-7777 INSURANCE
"LENDER" --------------------------------------------
ADDRESS
--------------------------------------------
1500 KANSAS AVE, SUITE 2E
LONGMONT, CO 80501
--------------------------------------------
TELEPHONE NO. IDENTIFICATION NO.
-------------------------------------------------------------------------------------------------------------------
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
-------------------------------------------------------------------------------------------------------------------
DLA VARIABLE $750,000.00 4/26/96 4/26/97 3528103
-------------------------------------------------------------------------------------------------------------------
INSURANCE REQUIREMENT:
The Borrower identified above understands that one of the requirements of the
loan or financial accommodation is that the property pledged as collateral on
the loan must be insured.
INSURANCE COVERAGE:
The insurance coverage must provide at least fire, theft, combined additional
coverages, and in addition, $ n/a deductible comprehensive and collision
coverage on motor vehicles. The insurance policy must contain a loss payable
clause endorsement naming the Lender.
INSURANCE COMPANY:
BORROWER UNDERSTANDS THAT BORROWER MAY CHOOSE THE PERSON THROUGH WHOM THE
INSURANCE IS TO BE OBTAINED, AND THAT IF IT IS OBTAINED THROUGH LENDER, THE
COST OF THE INSURANCE WILL BE $ n/a . The Insurance coverage must be provided
by an insurance company reasonably acceptable to Lender.
DURATION OF INSURANCE COVERAGE:
The insurance coverage identified above must remain in effect during the term of
the loan or financial accommodation.
FAILURE TO PROVIDE INSURANCE:
Proof of the required insurance coverage with an effective date the same or
earlier than the Funding/Agreement Date indicated above must be delivered to
Lender within ten (10) days from the Funding/Agreement Date. Borrower
acknowledges and understands that if Borrower fails to provide proof of the
required insurance or fails to maintain such insurance at any time during the
term of the loan or financial accommodation, the Lender may obtain a policy
protecting Lender's interest in the collateral for the remaining term of the
loan. BORROWER ACKNOWLEDGES AND UNDERSTANDS THAT IF LENDER PURCHASES ANY SUCH
INSURANCE COVERAGE THE INSURANCE COVERAGE WILL PROVIDE LIMITED PROTECTION
AGAINST PHYSICAL DAMAGE TO THE COLLATERAL UP TO THE AMOUNT OF THE LOAN.
Borrower further acknowledges that: Any equity in the collateral will not be
insured; the insurance coverage will not provide any public liability or
property damage indemnification, and will not meet the requirements of any
financial responsibility law.
AUTHORIZATION:
Borrower authorizes Lender to obtain insurance coverage to protect Lender's
interest in the collateral and to add the premium to the loan or account
balance in the event that Borrower fails to provide proof of the required
insurance coverage, or if such insurance coverage is cancelled or terminated.
Interest on the premium shall accrue at the interest rate indicated on the
promissory note or agreement and shall be charged from the date the premium is
added to the loan amount.
PROPERTY TO BE INSURED:
EQUIPMENT, HARDWARE, FURNITURE, AND INVENTORY
INSURER:
Borrower has arranged for the required insurance to be provided through the
insurance company shown below and requested an insurance agent of the company
to note a loss payable clause endorsement in favor of Lender on the policy and
to send proof of such coverage to Lender.
INSURANCE COMPANY:
-----------------------------------------------------------------------------------------------------------
AGENT: PHONE:
-------------------------------------------------------------------------- -------------------------------------
POLICY OR BINDER DATE: NO:
---------------------------------------------------------- --------------------------------------
EFFECTIVE DATE: EXPIRATION DATE:
----------------------------------------------------------------- -------------------------
=============================================================================================================================
Borrower has read, understands and agrees to the terms and conditions of this
Agreement and acknowledges receipt of an exact copy of this Agreement.
DATED: APRIL 26, 1996
BORROWER: CORAL SYSTEMS, INC. BORROWER: CORAL SYSTEMS, INC.
/s/ ERIC JOHNSON /s/ HOWARD KAUSHANSKY
- -------------------------------------- --------------------------------------
ERIC JOHNSON HOWARD KAUSHANSKY
10
[PIONEER BANK OF LONGMONT LETTERHEAD]
LOAN AGREEMENT
April 15, 1996
Coral Systems, Inc
1500 Kansas Ave. Suite 2E
Longmont, CO 80501
Dear Gentlemen:
Pioneer Bank of Longmont has approved the credit request of Coral Systems, Inc.
Funds may be drawn under this loan beginning at such time as all conditions of
lending described therein have been satisfied. We are pleased to serve your
business needs and look forward to our business relationship. The following
describes the terms and conditions of our loan.
Borrower: Coral Systems, Inc
Lender: Pioneer Bank of Longmont ("Bank")
Loan Amount: $750,000.00, to be evidenced by a promissory note in that
amount.
Interest Rate: Floating rate at 1.25% over New York Prime rate
Loan Fees: Associated documentation and recording fees, to be paid by
Borrower
Loan Term: 1 year
Repayment Terms: Interest payable monthly, balance due at maturity
11
Financial Statement
Upon preparation, but in any event within 60 days after the last day
of each fiscal year of Borrower, the financial statements of the
Borrower as of the end of and for such fiscal year setting forth in
comparative form the corresponding figures of the financial statements
showing the balance sheet and income statement, all in reasonable
detail.
Additional Information
Such further information as may reasonably be necessary or as the Bank
may reasonably request to determine whether Borrower is complying with
its obligations under this Agreement, the notes and the security
documents, or the Agreement, security documents, or to determine the
financial condition of Borrower.
AFFIRMATIVE COVENANTS
Until payment in full of the Obligation contemplated hereby and the
performance of all other obligations of the Borrower under this
Agreement, the Borrower agrees to do all of the following unless the
Bank shall otherwise consent in writing:
Borrower will maintain a primary depository account with the
Bank.
Borrower will notify the Bank of any material adverse claims
against the Borrower if and when any claims arise.
EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute and
"Event of Default" hereunder and under the related documents and
instruments:
The Borrower shall fail to pay, when due, any amount of
principal of or interest on any Obligation contemplated hereby
(whether due on the date provided for therein or by
acceleration or otherwise) or any other amount payable by
Borrower hereunder the related documents or instruments.
12
Default with respect to any other indebtedness of the Borrower
for borrowed money if the effect is to accelerate such
indebtedness or permit the holder thereof to cause such
indebtedness to become due prior to its stated maturity and
such indebtedness to become due prior to its stated maturity
and such indebtedness shall not be paid when due.
Any representation or warranty made by the Borrower herein, or
in the related documents or instruments, or in any certificate
or financial statement furnished pursuant to the provisions
hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time made or
furnished; or the Borrower shall default in the performance or
observance of any covenant contained in this Agreement or the
related documents and instruments if the default shall remain
uncorrected for thirty (30) days after the Bank gives notice
to the Borrower, plus such additional reasonable time as may
be necessary if default cannot be remedied within the
foregoing thirty days for reasons beyond the Borrower's
control.
CONSEQUENCES OF DEFAULT
Upon the occurrence of any Event of Default and thereafter, the Bank
shall be under no further obligation to make loans or further advances
hereunder and may at its option declare the principal of any the
interest on any Obligation contemplated hereby and all other sums
payable, whereupon the same shall become immediately due and payable
without protest, presentment, notice of demand, all of which the
Borrower expressly waives. Regardless of whether the Bank shall
exercise its option to accelerate pursuant to the preceding sentence,
the Bank may, at its option, realize on any of all of the Collateral
by exercising any remedies provided in related documents and
instruments or otherwise provided by law.
The Bank shall have the right to set off against the obligation held
by it any debt owing to the Borrower by the Bank, including, without
limiting the generality of the foregoing, any funds in any deposit
accounts now or hereafter maintained by the Borrower with the Bank,
and for such purposes the Bank shall have and there is hereby granted
to and created in favor of the Bank a security interest in all such
deposit accounts.
13
MISCELLANEOUS
Amendments
No provision or term of this Agreement may be amended, modified,
revoked, supplemented, waived or otherwise changed by Borrower or the
Bank unless designated by both as an amendment, supplement, or waiver.
Entire Agreement
This Agreement, and the documents and instruments executed and
delivered in conjunction herewith, constitute and incorporate the
entire agreement between the Bank and Borrower concerning the subject
matter of this Agreement, and supersede any prior agreements between
the Bank and Borrower concerning the subject matter thereof.
We appreciate the opportunity to extend this commitment to you. If these terms
and conditions meet with your approval, please indicate acceptance by signing
below and returning this document to the Bank. This loan will be available once
all the documentation has been executed and returned to the Bank. If you have
any questions regarding the above, or if I can provide you with any help,
please call me.
Sincerely,
/s/ DANIEL L ALLEN
Daniel L Allen
President and CEO
Acknowledged and accepted by Coral Systems, Inc on this 26th day of April 1996.
by: /s/ ERIC ALAN JOHNSON
----------------------------------------------------------------------------
Coral Systems, Inc
14
Collateral: Perfected 1st Security interest in all accounts, accounts
receivable, cash, equipment, transferable third party software
rights, hardware, furniture, and inventory now owned or hereafter
acquired wherever located, excepting purchase money security
interests where applicable
Other conditions precedent to funding:
The Bank shall be under no obligation to make the initial advance
contemplated unless all of the following have been executed and
delivered to the Bank.
Borrower will maintain compensating deposit accounts with Lender at
all times during the loan term. The required amounts to be maintained
at the Bank shall be contingent on the loan balance exceeding
$500,000.00. When the loan balance advances above $500,000.00, a
$250,000.00 deposit shall be maintained at the Bank until the loan is
reduced below the $500,000.00 level. To recapitulate: loan balance 0-
$500,000.00--no specified compensating balance required, $500,000.00-
$750,000.00--a $250,000.00 compensating balance is required.
"Borrowing" and Bank resolution of Borrower on the Bank's standard
forms or others acceptable to Bank.
All duly executed security guaranty agreements that are required
pursuant to this agreement.
Borrower agrees to maintain adequate hazard insurance with coverage on
secured collateral property. Provide Bank with evidence of such
insurance, require insurance companies to notify Bank with not less
than 30 days notice before such policies are altered or canceled, and
said insurance policies shall name Bank as loss payee.
REPORTING REQUIREMENTS
Borrower shall provide and deliver the following financial statements and other
reports to the Bank:
Balance Sheet and Income Statement
Within 60 days after the last day of the year, a copy of the
Borrower's consolidated balance sheet and income statement prepared by
Borrower as of the end of and for such year and certified by its
principal financial officer to be true and correct and to have been
prepared in accordance with generally accepted accounting principals
that are consistent with those previously applied in Borrower's most
recent financial statement.